Accounting 201 Exam 1 (ch. 1-4)

Which statements below define a liability? (Check all that apply.)

-A creditor's claims against the assets of a business -The company obligations to provide assets, products, or services to others -An amount owed to a creditor

When recording transactions into the accounting equation, which of the following statements are correct? (Check all that apply.)

-After recording the transaction, total assets will always equal total liabilities plus equity. -The accounting equation must always remain in balance.

All of the following are part of the FASB conceptual framework: (Select all that apply).

-Recognition and measurement -Objectives -Elements -Qualitative characteristics

Select internal users of accounting information from the choices below. (Check all that apply.)

-Research and development managers -Purchasing managers

Which of the statement(s) below define(s) an asset? (Check all that apply.)

-Resources controlled by the business -Resources with expected future benefits -An amount owned

Which of the following statements explain(s) how the accounting equation applies to businesses? Check all that apply.

-The relation of assets, liabilities and equity is reflected in the equation. -The equation applies to all transactions. -The equation states that Assets = Liabilities + Equity. -The equation reflects that the total of what a business owns at any point in time will equal the total of what it owes creditors and owners.

If a customer makes a partial payment of $100 on a service for which you have already billed him, you would record this transaction into the accounting equation by:

-decreasing cash $200 -decreasing accounts payable $200

When supplies are purchased on credit it means that: (Check all that apply.)

-the Accounts Payable account will be increased. -the business will pay for the supplies at a later time. -a liability has been incurred.

Many accounting professionals work in one of the following areas: A) Financial Accounting B) Managerial Accounting C) Tax Accounting Identify each area of accounting in the list below:

1. Investigating tax fraud = Tax Accounting 2. Estate planning = Tax Accounting 3. Budgeting = Managerial Accounting 4. Reviewing financial statements for criminal investigations = Financial Accounting 5. Planning transactions to minimize taxes = Tax Accounting 6. Cost Accounting = Managerial Accounting 7. Enforcing tax laws = Tax accounting 8. Internal auditing = Managerial accounting

Net income is calculated using the following formula: ______________ (expenses/revenues/assets) - _________________ (expenses/revenues/assets) = Net income. Use one word for each blank.

Blank 1: revenues Blank 2: expenses

Relevance Faithful Representation

Generally accepted accounting principles (GAAP) wants information to have: (Check all that apply).

Which statement below defines accounting?

It identifies, records, and communicates business transactions.

Managerial accounting is focused on the needs of

internal users